AKRON, Ohio -- FirstEnergy Corp.'s move toward more predictable profits from its regulated companies continued during the second quarter.

The company Tuesday reported that it earned a net profit of $64 million, or 16 cents per share, on sales of nearly $3.5 billion during the three months ending June 30.

That compares to a net loss of $164 million, or 39 cents per share, on revenues of more than $3.5 billion in the second quarter of 2013.

"Through the second quarter, our regulated distribution and transmission businesses have produced solid results that are in line with our expectations," said Anthony Alexander, president and CEO, in a statement accompanying the financial report.

Tuesday's financial report also shows that for the first half of the year the company's net income was $272 million, or 65 cents per share, on sales revenues of nearly $7.7 billion. That compares to a net income of $32 million, or 8 cents per share, on revenues of $7.2 billion in the first six months of 2013.

"We are making steady progress with our plans to focus on growth through our regulated businesses," Alexander said, adding that the company expects it will meet its 2014 earnings expectations.

And Alexander left no doubt that the company intends to flee the risk exposure of competitive markets -- reigning in the sales force at the unregulated FirstEnergy Solutions, which also owns all of the company's power plants.

The competitive wholesale markets "are clearly in transition," Alexander told financial analysts in a live teleconference now archived on the investor pages of the the company's website.

"We are proactively responding," he continued. "While we have experienced a relatively stable and predictable wholesale market for the past several years, we believe that a fundamental change in the market is under way," he said, because many utilities are closing old coal-fired power plants and turning to natural gas "and other less reliable sources."

"We saw the first evidence of this last year during hotter weather in September, at the beginning of the plant outage season, and then this past winter's polar vortex highlighted again the issues the markets will likely face as the fleet of assets [power plants] used to provide central electric service is fundamentally changed," he said.

The bottom line: The company is going to look more and more like an old-fashioned, regulated utility, insulated from the wholesale markets it fought so hard to get access to in 2008 when Gov. Ted Strickland, a Democrat, and Republican lawmakers were taking a hard look at continuing deregulation of the electric utilities.

One of the design changes critical to making that happen is the company's latest rate plan, filed with the Public Utilities Commission of Ohio, late Monday, less than 24 hours before Tuesday's scheduled financial report and meeting with analysts.

That rate plan, which includes a novel arrangement that appears to sidestep deregulation, also came less than a week after a major investment company downgraded FirstEnergy's stock and advised its clients to sell.

If approved, the rate plan would not take effect until mid 2016. It's centerpiece is a provision to allow the company's regulated Ohio distribution companies to buy all of the power -- on a cost basis -- generated by two of FirstEnergy's large Ohio-based power plants.

The Illuminating Co., Ohio Edison and Toledo Edison would sign 15-year power purchase agreements to buy all of the power that the Davis-Besse nuclear power plant and the W.H. Sammis power plant generate.

The three traditional power companies, which no longer own their own power plants, would then sell that power into wholesale markets, with their customers either paying the difference or reaping the benefit between the cost of the power and whatever the wholesale price at the time of the sale.

Analysts expect that FirstEnergy will be required to upgrade the pollution-control equipment at Sammis to meet new federal emission standards. The company already has spent millions of dollars modernizing Davis-Besse.

The power purchase arrangement would insulate FirstEnergy Solutions, the company's unregulated division and owner of its power plants, from the risks of competitive markets, making parent company FirstEnergy Corp. appear a little more like an old-fashioned, regulated utility.

Even before announcing it would seek approval of the unusual rate plan, the company had been moving away from the risks --and unexpectedly poor profits -- of its unregulated side.

Alexander said FirstEnergy has been "taking actions to place our competitive business in a much stronger position by reducing our exposure to weather-sensitive retail loads, maintaining a more open position to take advantage of market upside opportunities, and reducing or delaying some capital expenditures at our generating fleet."

Last week, UBS financial services advised its clients to sell their FirstEnergy stock after concluding that its share price could tumble to as low as $26.

And on Tuesday, following FirstEnergy's release of its financial results, UBS issued a second note to investors, saying the rate plan and the power purchase agreement protecting FirstEnergy Solutions would probably not add value to the company's share price.

"We believe both plants likely failed to clear the latest capacity auction," the note speculated, referring to the annual May auction that grid manager PJM Interconnecton conducts to determine the most competitive power plants in its 13-state region. Power plants that clear the auction receive "capacity payments," without which they won't be able to compete in PJM power auctions during the following 12 months because their power prices would be too high.

Alexander, during the conference call, said the company's largest coal-fired power plant, the Bruce Mansfield plant in Pennsylvania, did not clear in PJM's May auction. He said the company has decided to minimize major upgrades at the plant until seeing the results of a follow-up capacity auction in September.

He did not mention the fate of Sammis or Davis-Besse in the May auction, but William Ridmann, FirstEnergy's vice president of rates and regulatory affairs, declined to reveal whether the two plants cleared the PJM auction during a Plain Dealer interview Monday. Officials at deregulated utilities generally regard that information as confidential.

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